Correlation Between Core Molding and Balchem

Can any of the company-specific risk be diversified away by investing in both Core Molding and Balchem at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Core Molding and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Core Molding Technologies and Balchem, you can compare the effects of market volatilities on Core Molding and Balchem and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Core Molding with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Molding and Balchem.

Diversification Opportunities for Core Molding and Balchem

-0.5

Correlation Coefficient

Core Molding  Balchem

Very good diversification

The 3 months correlation between Core and Balchem is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Core Molding Technologies and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Core Molding is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Core Molding Technologies are associated (or correlated) with Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Core Molding i.e., Core Molding and Balchem go up and down completely randomly.

Pair Corralation between Core Molding and Balchem

Considering the 90-day investment horizon Core Molding Technologies is expected to under-perform the Balchem. In addition to that, Core Molding is 1.6 times more volatile than Balchem. It trades about -0.06 of its total potential returns per unit of risk. Balchem is currently generating about 0.02 per unit of volatility. If you would invest  16,397  in Balchem on December 28, 2024 and sell it today you would earn a total of  214.00  from holding Balchem or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Core Molding Technologies  vs.  Balchem

Core Molding Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core Molding Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Balchem

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Balchem are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Balchem is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Core Molding and Balchem

The main advantage of trading using opposite Core Molding and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Molding position performs unexpectedly, Balchem can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Balchem will offset losses from the drop in Balchem's long position.

The idea behind Core Molding Technologies and Balchem pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.